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how much does it cost to build?

by
bubba of the bubbles (noreply@blogger.com)
—
last modified
Dec 05, 2010

One of the challenges of building a custom home is figuring out how much it costs to build. Some books state that you can forget about accurately estimating what it will cost to build a custom home--a disturbing prospect for a bud on a budget. Furthermore, it's important to know if whatever numbers you are comparing and contrasting are apples and apples and not oranges and apples. For example, we asked an architect friend how much it costs to build modern, and he replied "Plan on $200 a square foot." Another architect told us $125. For a 2,000 square foot house, that's a $150,000 difference (not to mention a scary amount of scratch to begin with). What gives?

The first thing to note is the difference between "soft" and "hard" costs. In short, soft costs occur before construction begins and hard costs occur after construction begins. Soft costs include the architectural planning, property acquisition, the permitting and approval process with the city, and any carrying costs (such as interest payments) before construction begins. Oftentimes, quoted cost per square foot only includes the hard costs, the costs once the concrete starts sloshing and nails start flying. Therefore, a quick question you should ask after receiving a back-of-the-envelope estimate is "Is that just hard costs?"

Another thing to ask is whether or not the price per square foot includes the garage and any patios as part of the square feet. In other words, is the price per square foot for conditioned space only? If not, you might walk away with a considerable underestimate of the total price to build. This is important not only for budgeting purposes, but also for assessing the economics of building on a particular lot.

This varies, of course, across the country. For the Austin area it seems that building a cookie cutter suburban-style, a semi-custom, starts at about $100 a square foot. For custom, costs start at $125 for builder-grade finish out (in other words, not fancy). The fancier you want it, the more it costs. Modern tends to cost more because the materials and construction are less familiar to builders and the materials themselves can cost more. Building green also adds to the cost.